Businesses not equipped for digitization: study by the University of Bayreuth reveals deficiencies

Businesses are having difficulty keeping up with digitization, and their IT experts do not yet have answers to some of the central questions regarding IT design. This is the basis conclusion of a study by the project group Information Systems Management of the Fraunhofer Institute for Applied Information Technology (FIT) at the University of Bayreuth together with management consultancy A.T. Kearney.

Interviews with ten Chief Information Officers (CIOs) of businesses that are active internationally and an online survey of 140 international managers at the highest levels of leadership have delivered some sobering findings: “Many people do not understand what exactly the threat is, what characteristics IT setups need to have these days, and how the transformation to such a set-up could be achieved,” said Prof. Dr. Maximilian Röglinger of the project group Information Systems Management. “The CIOs openly admit being in the dark when it comes to digitization and the right IT setup,” said Michael Römer, Director of Digital Transformation in Europe, the Middle East and Africa at A.T. Kearney.

More than 70 percent of those surveyed already have a digital agenda, but are often unsuccessful in implementing it: two-thirds of those surveyed said their IT does not live up to the demands of a digital company – and nearly a third (27 percent) are considered “digital deniers”, meaning they are neither equipped for the digital revolution nor are they following it with any great interest. Two-thirds of those surveyed believed that their complex, heterogeneous processes, structures, and IT landscapes prevent them from quickly and flexibly adapting to changes in the environment in order to remain competitive. “It is alarming that the vast majority of executives believe their IT is not keeping pace with the digital revolution,” said Römer.

“Digital labs are viewed critically by more than two-thirds, since they devote too little attention to their system integration and added value. This often leads to a deadlock and waiting for an ultimate solution that doesn’t exist.“ Just under 70 percent of those surveyed no longer consider IT innovation laboratories to be the right approach, and almost as many view bimodal IT – the separation of agile and plan-based IT – as having failed.

“I am not going to be able to turn around a tanker by using only motor boats,” Prof. Röglinger said concerning the findings. “The solution lies in integration: staff responsible for business and IT must be merged together to a greater degree. Concepts such as integrated solution teams, in which IT and business experts assume joint responsibility for IT solutions for the entire product life cycle, are considered to be promising.“

More than a quarter of those surveyed consider it essential to get over the previous separation of business and IT. At the same time, networking in ecosystems in which multiple businesses bundle their expertise to be able to meet the needs of their customers is seen as a key factor of success: 70 percent of those surveyed thus favoured a modular set-up of IT infrastructure that allows the business to participate in digital ecosystems.

The companies also see that action is needed with regard to qualifications and digital mindsets: 70 percent support training measures for staff for digitization, and an overwhelming 90 percent consider these much-needed qualifications to be at the mid- and upper-management levels. More courage to make changes and a better understanding of digital business opportunities such as smart products and services is considered to be needed. In this connection, two-thirds agree that the digital revolution cannot be tackled without external help.

Background:

Germany’s first project group Information Systems Management of the Fraunhofer Institute for Applied Information Technology (FIT) brings together the research areas finance and information management in Augsburg and Bayreuth. It links proven expertise in finance management, information management and information systems management, and methodological know-how at the highest scientific level with a customer- and service-oriented approach. FIT provides interdisciplinary support by developing digitization strategies: www.fit.fraunhofer.de/wi

Fraunhofer is Europe’s leading organization for application-oriented research. There are 67 institutes at locations throughout Germany working under the umbrella of Fraunhofer. More than 23,000 staff members process an annual research budget of 2 billion euros. https://www.fraunhofer.de/

A.T. Kearney is one of the world’s leading management consultancies for executives, advising global corporations as well as leading medium-sized companies and public institutions. A.T. Kearney help clients transform their organization and operations. www.atkearney.de